Archive

Monthly Archives: November 2019

7th November 2019

Twin peaks

MARKET CLOSE:
iTraxx Main

48.3bp, -1bp

iTraxx X-Over

231.3bp, -1bp

🇩🇪 10 Yr Bund

-0.24%, +8bp

iBoxx Corp IG

B+108.8bp, -1bp

iBoxx Corp HY

B+384bp, -7bp

🇺🇸 10 Yr US T-Bond

1.96%, +14bp

🇬🇧 FTSE 100

5415.50, (-1.18%)
🇩🇪 DAX

9525.77, (-0.47%)
🇺🇸 S&P 500

2488.65, (-1.51%)

Record supply meets the demand…

There are still six weeks of business left in the market this year, but already IG non-financial corporate bond issuance has set a fresh record. Deals from Apple and Bayer took us zipping past the €285bn record from 2009. And a trio of transactions in a busy high yield primary market made for 2019 being the second-best year for deals in this market (€62bn). The final full-year volume for the former will comfortably exceed €310bn while the high yield volume will likely come in around €70bn – and short of the record €75bn issuance from 2017.

It was an eventful session with records broken but also, quite surprisingly, a couple of deals pulled as investors’ tolerance levels were breached. The push backs aside (and there have been a few this year), the heavy load of issuance in 2019 has not had a negative impact on spreads. In fact, the supply of deals has been comfortably absorbed, subsequent demand remains at elevated levels and final bond pricings continue to be rammed tighter versus initial guidance. Let the music play on.

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5th November 2019

Risk markets rediscovering appetite

MARKET CLOSE:
iTraxx Main

48.7bp, -0.6bp

iTraxx X-Over

227.3bp, +0.6bp

🇩🇪 10 Yr Bund

-0.32%, +3bp

iBoxx Corp IG

B+109.5bp, -2bp

iBoxx Corp HY

B+391.5bp, -6bp

🇺🇸 10 Yr US T-Bond

1.86%, +7bp

🇬🇧 FTSE 100

5415.50, (-1.18%)
🇩🇪 DAX

9525.77, (-0.47%)
🇺🇸 S&P 500

2488.65, (-1.51%)

As trade deal hopes rise…

The rallying markets are not getting ahead of themselves – as seen in a more reflective session on Tuesday. Nevertheless, the potential for some kind of a trade deal is the main driver for an improvement in the general tone, and the odds are stacked in favour of something getting done – not least because Trump needs a deal.

It might be the only bit of good news that he gets for a while. Whatever, market optimism saw the Chinese renminbi rally past the $7 mark, equities continue their ascent (the auto sector will breathe a sigh of relief), credit spreads maintain their tightening trend (the ECB will bolster the bullish mood), while alone heading weaker were rate markets. The latter continues to enjoy a fantastic year performance-wise amassing year to date returns of 8.2% (Eurozone government bonds, iBoxx).

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4th November 2019

🗞️ Plain sailing surely, into year end

MARKET CLOSE:
iTraxx Main

48.7bp, -1.3bp

iTraxx X-Over

226.7bp, -5.7bp

🇩🇪 10 Yr Bund

-0.35%, +3bp

iBoxx Corp IG

B+111.7bp, -1.5bp

iBoxx Corp HY

B+397.6bp, -6bp

🇺🇸 10 Yr US T-Bond

1.78%, +5bp

🇬🇧 FTSE 100

5415.50, (-1.18%)
🇩🇪 DAX

9525.77, (-0.47%)
🇺🇸 S&P 500

2488.65, (-1.51%)

Pulling in one direction…

Now is the time to hang in there and see it out. Markets are rallying, few should be looking to bail. The going is good. November has got off to a fine start and we might just see the risk markets rise throughout the month, before coming to a more measured close through December.

It’s not plain sailing, there is no macro recovery, not even a whiff of one even after some mixed data from the US (factory orders missed, declining by 0.6% in September, being the latest). Yet the broad mood is improving and it’s on trade – not least because Trump needs a deal with the Chinese. That is going to see us over the line with equities having added over 20% this year and fixed income across the board with total return performance of 7% or more.

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3rd November 2019

Path clears, seeing out an excellent year

MARKET CLOSE:
iTraxx Main

51.7bp, -1.7bp

iTraxx X-Over

232.4bp, -7.6bp

🇩🇪 10 Yr Bund

-0.38%, +3bp

iBoxx Corp IG

B+113bp, unchanged

iBoxx Corp HY

B+404bp, -3bp

🇺🇸 10 Yr US T-Bond

1.74%, +5bp

🇬🇧 FTSE 100

5415.50, (-1.18%)
🇩🇪 DAX

9525.77, (-0.47%)
🇺🇸 S&P 500

2488.65, (-1.51%)

US blows hot and cold…

US manufacturing might have contracted for the third successive month in October, but that jobs report is what will focus investors’ minds. The 128k Jobs added in October was well ahead of expectations and markets were boosted by the sharp revision to September’s additions. The Fed probably has a little more to do, though.

Still, the S&P rose to fresh records and, after having had a very good October, the Dax added another 0.75% – itself just around 5% away from its record high. Rates were in reverse, credit primary drew a blank in Europe and cash was unchanged. And the ECB’s QE operation was up and running. It should be a good November.

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